Verizon vs. T-Mobile: NAD issues mixed ruling on advertising claims

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(Getty Images) NAD recommended that Verizon clearly and conspicuously disclose the limited availability of its high-speed 5G service.

Verizon and T-Mobile are often at one another’s throats these days, and now the National Advertising Division (NAD) of BBB National Programs has determined that Verizon provided a “reasonable basis” for claims that its 5G service offers “speeds 10x faster” than T-Mobile’s 5G. However, NAD told Verizon to discontinue or modify a bunch of other claims. 

The decision came after T-Mobile challenged a series of advertisements about Verizon’s 5G service and comparing Verizon’s 4G LTE service to T-Mobile’s 5G service.

According to NAD, Verizon substantiated its claim in its “Samsung Galaxy S20 Ultra 5G” advertisement that its 5G offers “speed 10x faster” than T-Mobile’s 5G, referring to download speeds, which also appears in other ads and part of a product demonstration.

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However, in response to T-Mobile’s contention that the challenged advertising conveys the message that Verizon offers 5G services to consumers on a wide-scale basis that are over 10 times faster than T-Mobile’s nationwide 5G services, NAD recommended that Verizon “clearly and conspicuously” disclose the limited availability of its 5G service.

As for claims that Verizon’s typical 4G LTE download speed is over 120 Mbps and T-Mobile’s typical 5G download speed is 20 Mbps, NAD determined that the speeds depicted in the demonstrations should reflect the speeds consumers typically experience. NAD said it did not reach the issue of whether the advertising conveys a misleading message about the basis for the claim but noted that, "to the extent that different benchmark measurements produce different results, inconsistent evidence on comparative speeds calls into question the reliability of the test results and whether the comparative claim is supported." 

RELATED: Verizon told to stop ‘most powerful 5G’ claim

Regarding another claim in the Verizon Galaxy ad, NAD determined that although there was no dispute that Verizon’s 5G service is significantly faster than its 4G service, “the evidence in the record does not support the claim that a download that used to take 20 minutes now takes 20 seconds (i.e., Verizon’s 5G is 60 times faster than its 4G),” and therefore it recommended that Verizon discontinue that claim or modify it.

According to NAD, Verizon stated that it will comply with NAD’s decision.

DSS ‘disappoints’

T-Mobile regularly bashes Verizon for its limited 5G coverage due to its reliance on millimeter wave (mmWave) spectrum, whereas T-Mobile launched its nationwide 5G last year using 600 MHz. With the acquisition of Sprint’s 2.5 GHz spectrum, it's adding much more capacity, exposing Verizon’s weak spot in mid-band spectrum.

Verizon did claim a nationwide 5G service with the launch this week of Dynamic Spectrum Sharing (DSS), where it can use its 850 MHz spectrum to support 5G, but the speeds are more like 4G, which Verizon acknowledged. In markets where Verizon doesn’t have 850 MHz, VP of Technology Heidi Hemmer told Fierce earlier this week that it will use PCS or AWS spectrum.

RELATED: Verizon launches DSS, takes center stage during 5G iPhone launch

In a blog published today, investment analysts at LightShed Partners noted how T-Mobile likes to throw shade at Verizon for using DSS, and “for good reason.” T-Mobile has plenty of mid-band spectrum for dedicated 5G New Radio (NR) and Verizon doesn’t. “In addition, DSS likely erodes capacity that Verizon needs for its 120 million subscribers,” wrote analysts Walter Piecyk and Joe Galone.

“Maybe Verizon has also now realized that the capacity reducing impact of DSS on its mid-band spectrum was not worth the impact it would have on existing customers,” they wrote. “If Verizon plans to deploy DSS on just one block of spectrum, our outlook for T-Mobile has improved notably for 2021.”

Other investment analysts are bullish on T-Mobile for its 5G spectrum position, figuring it has a couple years’ advantage.

Verizon’s nearest hope for acquiring significant, unencumbered mid-band spectrum is the C-band auction, which starts December 8. It also can and does use 3.5 GHz Citizens Broadband Radio Service (CBRS) spectrum, both licensed and unlicensed, but it’s not nearly enough to close the gap with T-Mobile.

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